India Growth Story?

The recent IIP numbers are in the downward trend. Analyst are citing these are temporary set backs, comparison to high base numbers (IIP data) from last year, and global slow down.

Crude has touched $135 and Indian basket is around $122. With OIL marketing companies making a loss of Rs16/- and Rs27/- per liter of petrol and diesel and Rs320/- (approx) per LPG cylinder, I wonder if there is any more stem left! BPCL and HPCL are talking of quota set of each individual oil distributor based on the sales last year.

There was a BRIC report sometime back, now people are talking about report by a Goldman Sachs analyst who predicted that crude will touch $200.

Government is doing well by artificially controlling the prices but this is not a permanent measure, they should be doing (I hope) more than this. They should explore various methods of transferring the crude burden partly to consumers who can afford it and at the same time not impacting the inflation. They have to selectively subsidize the core functions of economy from the crude burden but leave the affluent class (and the emerging middle class) to pay for their petrol bill. By core functions I mean transportation of industrial goods, power generations etc.

Rupee surged to all time high of around 39.5 w.r.t $ and it is back to 43.5, thanks to high crude import bill.

Indian agriculture growth statistics are not exciting, this coupled with shrinking land under irrigation, dismal condition of Indian farmers and unpredictable nature of monsoon only indicate that situation is going to get worse.

Though it is projected that the wheat production is set to increase but I am not really sure it would be able to satisfy the ever increasing need of growing economy. And what about wheat production for coming years! Do we have plan for that in the pipeline or we are just relying on the monsoons of those respective years.

Not only agriculture, other building blocks of economy, capital goods, power sector, inland transport and ports & harbor infrastructure, all of these need significant investments, I wonder how government will fund these requirements.

Recently there was a news that Thailand was planning a cartel of ‘Rice Exporting Nations’ and there was a huge cry among the international community. I feel the way OPEC is able to monopolize the Crude market; the day is not far where the other commodity producing nation will form the other sorts of cartel and the world will again move back to the barter system.